BA220 Midterm Review

Net profit margin is net profit /  _____.

• A. EBITDA

• B. EBIT

• C. Sales

• D.    Operating cash flow

Which of the following is true for a corporation?

• Does not provide limited liability for its owner

• Involves significant legal costs during the formation process

• Has a limited life

• Has its profits taxed as personal income

Which of the following is included in working capital?

• Net Profit

• Accounts receivable

• Land

• Capital expenditures

What are the three ratios that make up DuPont?

• Inventory turnover, net profit margin, and ROE

• Inventory turnover, net profit margin, and equity multiplier

• Asset turnover, net profit margin, and ROE

• Asset turnover, net profit margin, and equity multiplier

Inventory turnover is:

• How many days it takes for a company to sell out its inventory

• Current assets / inventory

• How many times a company sells out its inventory per year

• The rate at which a company can make inventory in a year

Common-size financial statements present all income statement values as a percentage of:

• the forecasted budget

• sales

• total equity

• total assets

Leverage:

• increases as the net working capital increases.

• is equal to the market value of a firm divided by the firm's book value.

• is inversely related to the level of debt.

• increases the potential return to the shareholders.

What activities fall under the operating section of the cash flows statement?

• Net profit, CapEx, Changes in working capita

• Net profit, Depreciation, Changes in working capital

• CapEx, Stocks and bonds, Depreciation

• CapEx, Mergers, and Divestments